The "letting go" challenge of entrepreneurs

Key Takeaways:

  • The emotional factors that affect succession are powerful.
  • Establishing one’s legacy is both a financial and nonfinancial issue for successful family entrepreneurs. There are five critical aspects for legacy fine-tuning.
  • Sharing stories between the generations can ease tensions at family meetings and make them more productive.

 

“Letting go” and saying goodbye to your company is a terribly difficult business family issue. Because letting go is such a challenge, it contributes significantly to the fact that nearly three-quarters (70 percent) of families fail to maintain their business into the second generation (Organizational Dynamic, summer 1983). Many blame mom or dad for not letting go, but indeed the whole family resists change and cannot let go.

Emotional and career issues are at stake. More subtly, perhaps, there is the resonance of the BIG letting go—death—that subconsciously entwines with giving up the management reins. Often the entire family avoids the discussion to keep from creating an “emotional backwash” as one client recently put it.

 

The need to be appreciated


The need to be appreciated is a second factor. Most senior-generation entrepreneurs will forever deny that they need other members of their families to appreciate their efforts. However, virtually all want validation from their adult children.

 

Aging entrepreneurs in particular will ask themselves, “Have I made a difference?” or, “Has my life meant something or not?”

Certainly adult children appreciate their parents, but they usually fail to express that appreciation. In my experience, the hurt of feeling unappreciated or taken for granted causes most of the tension in family business succession planning. The patriarch wants to be appreciated and validated for what he has accomplished. Conversely, validation is exactly what the adult children want from their parents. All sides feel slighted.

 

The loss of significance is the third emotional factor hindering the succession planning process. Successful adults take significance for granted because it is natural to feel worthy during one’s working life. However, many retirees have told me their sense of being significant is critically diminished once they stop working.

Once the center of everything in his company, a recently retired entrepreneur told me he worked hard his entire life to build a successful company. At age 67 he had decided now was the time to bring his family together to discuss his plans for the future and how he envisioned things for both the company and the family. As part of his presentation, the entrepreneur mentioned some of the financial details and how each of the adult children would benefit. He was talking about significant amounts of money and was expecting a lot of validation and appreciation for his efforts.

 

To the contrary, what occurred was the resurrection of some old, unresolved hurts that gradually evolved into a family fight. What the entrepreneur hoped would be a wonderful family meeting—where the children could understand what he had created for them—turned out to be a nightmare.

 

The emotional factors that affect succession are powerful: fear of letting go and the need to feel appreciated and remain significant. To answer these “Last Challenges of Entrepreneurship” is not difficult when business family members and entrepreneurs systematically address these concerns. First, it must be acknowledged that they are issues for the entire family to address, not just mom or dad who started the company.

Begin the process by helping the entrepreneur shape a plan for his or her career in a manner that recognizes the needs of the family, the company and the nonfamily employees. Many call it helping the B.O.S.S. (Business; Other; Self; and Stakeholders).

 

When these constituencies are acknowledged, succession is successful—and even joyous. Entrepreneurs don’t need to “abandon” their companies; they simply need to change their job descriptions. This might mean becoming chairman of the board and designing, with the adult children’s input, a new leadership system for the company.

 

Legacy


What really is “legacy”? How does one fine-tune it? Laura Nash, in her Harvard Business Review article, “Success That Lasts,” defines legacy as “a way to establish your values or accomplishments so as to help others find future success.” Nash observes that we should not wait until we are 65 years old to start thinking about our legacy; we should distribute our emotional and physical resources (including happiness, achievement and significance, as well as legacy) throughout our lives.

 

A recent Allianz American Legacies study noted that baby boomers and their children agree that nonfinancial items (e.g., family stories, family heritage, family values and religion) are ten times more important than the financial aspects of inheritance. Yet the study revealed that less than a third of baby boomers and their adult children are having in-depth, meaningful discussion about legacy and inheritance.

Legacy is financial and nonfinancial. I have come to look at legacy as your gift to the future to help others find their own success, and my own legacy model contains five interrelated aspects:

  • Wealth Care – money and property
  • Business Legacy – succession plan
  • Heritage – history and ancestry
  • Family/Self – loving and caring
  • Community – services and philanthropy

Real-world examples

 

Fine-tuning a legacy requires implementing all five aspects of the model for your clients. I want to emphasize the importance of capturing stories that relate to family and history and the importance of consciously voicing life and family values.

 

One example of this approach is a client who always includes an item on the annual meeting agenda for the grandparents to make a presentation to the whole family (including the grandchildren) about some aspect of their early lives. Pictures and videos usually accompany their stories. The grandkids are always on the edge of their seats, learning about grandpa and grandma’s lives. Today’s technology makes it relatively easy to capture these wonderful stories that highlight family values and life experiences. The presentations are videotaped, and a disc is made for each family member. This is a priceless gift to the future.

Another example is to create an ethical will. This old Jewish tradition has senior-generation family members share the critical values they want to pass on. Topics for an ethical will can include the following:

  • Success as I see it
  • Mistakes I learned from
  • My happiest hours
  • Why I love you
  • What spirituality means to me
  • Stories with deep personal meaning
  • People or events that have shaped my life
  • Familial obligation
  • Favorite scriptural passages
  • Action for which I would like to ask forgiveness

Select any or all from the list above to share at future family meetings. Families enjoy wonderful, positive feelings when parents share their stories. Those stories nurture bonding and often produce a few tears and smiles when people come so close together.

 

I know of truly ambitious individuals who have written their life stories. An idea is that you can record your stories in book form or can create a video to share with the entire family. Some say that one of the greatest thrills in giving to the future is introducing your grandchildren to the arts and enrolling each of them in a book club on their first Christmas. Learning is a big part of my life. Make sure your grandkids learn to appreciate arts and culture and enjoy reading as well.

 

These examples emphasize the nonfinancial aspects of inheritance that according to the Allianz study are the most important. Share some of the stories and meaningful events of your life. Share with them the events and people who have shaped your life. This could be your greatest—and most appreciated—gift to the future success of your family.


In Part 2 of this article, we will further explore the "letting go" challenge of entrepreneurship by focusing on legacy and your gift to the future through service and philanthropy.

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